The GTA real estate market was one of the most intriguing stories in the Canadian housing industry throughout the coronavirus pandemic.
On the one hand, detached, semi-detached and townhouses witnessed a buying frenzy and dramatic price growth amid low inventories. On the other, transactions and prices fell across the city’s condo market, thanks to an enormous increase in supply.
The COVID-19 public health crisis presented an opportunity for many households wanting to purchase a condominium. Meanwhile, many condo owners who had purchased a unit in the last couple of years and used the suite as a rental property were forced to either rent the property below the value of their mortgage payments, or sell and suffer a loss.
Many housing analysts had agreed that this downturn was only temporary, maintaining that once Canada overcame the pandemic and its myriad of public health restrictions, the condo market would normalize.
Fast forward to fall 2021, and it turns out that industry observers were correct: Toronto and its regional condo market is recording tremendous growth.
GTA Real Estate: Strong Growth for Condominiums
According to the Toronto Regional Real Estate Board (TRREB), condominium sales advanced at an annualized rate of 10.6 per cent in the third quarter on 2021, totalling more than 7,800 transactions.
In the City of Toronto, there were 5,279 transactions in the July-to-September period, up 10.78 per cent from the same time a year ago.
Price growth in the GTA’s condo market has been impressive, rising 8.9 per cent year-over-year in the three months ending in September. The average selling price was $689,831.
In Toronto proper, the average selling price for a condominium was $726,099, up 6.62 per cent from the third quarter of 2020.
Even the rental market is heating up in the region’s condo sector. According to TRREB, there were 16,121 condo apartment rentals on the market in the third quarter, down 15 per cent. However, the average one-bedroom unit rental price was up 2.4 per cent to $2,060, while the average two-bedroom rental increased four per cent to $2,773.
“The condo market has seen a dramatic resurgence compared to a year ago. In 2020, first-time buyers sat on the sidelines due to economic uncertainty. However, this year, improving economic prospects have seen many of these buyers accelerate their search for a property. This trend will only continue as population growth resumes next year, and limited changes to supply are expected,” said TRREB President Kevin Crigger in a news release.
Supply remains a crucial issue in both the Ontario and Toronto condominium markets. In the region, new listings of condominiums tumbled 30.9 per cent year-over-year to 12,196 units, while active listings dropped at an annualized rate of 46.5 per cent to 3,882 units.
In the Toronto condo market, inventory was also on the decline. New residential listings of condos fell 32.6 per cent to 8,730 units, and active residential listings plunged 46.19 per cent to 2,918 units. The number of days on the market came in at 19.
“The condo market is catching up to the low-rise market segments in terms of market conditions. If demand continues to increase relative to supply, which is a distinct possibility assuming an acceleration in population growth over the next year, the annual rate of price growth could increase as we move into 2022,” said TRREB Chief Market Analyst Jason Mercer in a statement.
What’s Next for the GTA Condo Market?
Will more homebuyers be priced out of the GTA real estate market, and specifically in terms of Toronto condos? This has become another layer in the broader affordability concerns.
The average detached or semi-detached home in the Toronto real estate market is selling for well over $1 million. This is forcing the typical family to seek other options: leave the city (or province) or move into a more affordable and smaller condo apartment. As more households choose the latter, there will likely be more competition, producing tighter market conditions and raising the price.
Since the average selling price for a Toronto condo is more than $700,000, could this upward trajectory continue? Unfortunately, sky-high figures may be a distinct possibility. The consensus is that more buyers are expected to flood the market in the post-COVID economy, especially as Ottawa reopens the border and welcomes more than one million newcomers into the country over the next three years. If supply fails to keep up with this surging demand, prices for condo units in Toronto will have nowhere to go but up.
For many years, condominiums had functioned as reasonable alternatives for prospective homeowners trying to achieve the dream of homeownership. However, as valuations keep rising, it will take longer for Canadians to save for a down payment, which is already at 330 months, according to the National Bank of Canada (NBC).